Clozapine (trade name, Clozaril) is an improved but very expensive new treatment for schizophrenia indicated for patients who have failed to respond to standard antipsychotic drugs. The proposed study will examine the costs and effectiveness of clozapine in patients who have had long periods of inpatient treatment and who are currently hospitalized in three of Connecticut's state psychiatric hospitals. All patients at these hospitals will be surveyed to identify a group appropriate for clozapine. Qualified patients will be randomly selected for the study and randomly assigned to either clozapine or usual care. Recruitment will continue until 138 patients have been assigned to clozapine and 138 to usual care. All study subjects will be followed for two years to determine clinical course type of services required, and cost of their care.